Pay IRS

The Treasury Inspector General for Tax Administration (TIGTA) released their report titled Review of Fair Tax Collection Practice Violations During Fiscal Year 2014on May 28, 2015. When Congress passed the Fair Debt Collection Practices Act in 1977, they exempted the federal government from its requirements. (An aside, it must be nice to exempt yourself from rules others have to follow.) In 1998, Congress finally decided to apply the law to the IRS collection activities but they wrote a special version for IRS called the Fair Debt Collection Practices Act (FDCP).

FDCP Act requirements (from TIGTA report):

[T]he IRS may not communicate with taxpayers in connection with the collection of any unpaid tax:

At unusual or inconvenient times.

If the IRS knows that the taxpayer has obtained representation from a person authorized to practice before the IRS and the IRS knows or can easily obtain the representative’s name and address.

At the taxpayer’s place of employment, if the IRS knows or has reason to know that such communication is prohibited.

In addition, the IRS may not harass, oppress, or abuse any person in connection with any tax collection activity or engage in any activity that would naturally lead to harassment, oppression, or abuse. Such conduct specifically includes, but is not limited to:

Really?

TIGTA reports two, yes two (2), violations in the last fiscal year. The IRS is a huge organization. Even operating as well as a great customer service driven commercial entity I find it difficult to believe there were only incidences when they broke the rules. My guess is that most taxpayers do not take the time to report the abuse or harassment as they are afraid it will lead to more of the same.

What do you think?

Money down the drain by Images Money, under Creative Commons license, on Flickr

The American Institute of CPAs (AICPA) has a calculator to help you estimate the total tax you pay annually based on where you live, how much you make, your home costs and value, utility taxes, travel taxes, real estate taxes, fuel taxes and various other factors. The calculator is free and available here.

Please remember this is just an estimate and everyone’s situation varies. There is a disclaimer with more details on the limitations of the calculator.

For a family of four with $45,000 in wages, a $150,000 house, four vehicles and about 25 gallons a week in gas pays about 25.52% in total taxes. Less than 9.5% is income taxes with the remaining about 16% other taxes.

For a family of four with $150,000 in income, a $250,000 house, four vehicles and about 25 gallons a week in gas pays about 33.04% in total taxes with about 21.6% representing income taxes.

Both theoretical families did not spend much on alcohol, nothing on tobacco products and the poor souls did no travelling that required an overnight stay or airfare. They both pay quite a bit in total taxes.

Welcome IRS to the 20th century. Individuals can finally pay taxes online without the hassle of setting up an EFTPS account. In the past, you had to create an account with IRS’ Electronic Federal Tax Payment System (EFTPS). A few weeks later IRS would snail mail you some information you needed to complete the registration and then you could pay your taxes electronically. Unfortunately, businesses still need to go the EFTPS route but most businesses with employees and most newer businesses already have such an account.

IRS Direct Pay now allows individuals to pay immediately. You need to know what type of tax you are paying, the time period of the tax, who you are (name, Social Security #, date of birth, etc.) and your payment information. At the end you should print the receipt or otherwise record your confirmation number. The IRS charges no fees to use this service but they have no control over your bank, credit union, etc. See the IRS press release for more details.